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January 2009

I was going to write something about the Supreme Court's decision Monday in Crawford, further expanding the ability of employees to win retaliation lawsuits, but that's going to have to wait. (For those who can't wait, a PDF of the decision is here.)

Instead, the biggest news on the workplace front was Monday's 70,000-plus employees' getting laid off by major US employers. Twenty thousand at Caterpillar. Another 26,000 at Pfizer. Eight thousand at Sprint, and 7,000 at Home Depot. CNN has an especially cheerful chart here breaking down the 207,000 workers laid off in 2009. (They also came up with the "Bloody Monday" reference, near as I can tell.)

We've already posted on the media's propensity to play up bad economic news (see "Fear sells"). And we still need to point out that the S&P 500 is up more than 12 percent in the ten weeks since November 20. (Granted, it had been up as high as 24 percent just a few weeks ago.) But these layoff numbers are too huge to ignore.

I wish I had some really great HR advice today. I’m a little shell shocked, but here’s what I’d say: For those of you who are still there ... kick ass. Do your best work. Stop going to meetings. Start doing things. Make money.

Now’s the time to do our best work.

I completely agree. I would add that HR professionals, managers, and executives need to get in the trenches and rally the troops (feel free to add any other militaristic metaphors you like). Fear is driving the economy, and fearful employees are not gruntled employees. Thus, fear diminishes profits.

Talk to your employees. Tell them that it's going to be all right, that we'll make it through this OK. Live together, die alone. (No, wait ... that's something else.)

Tell them to do one extra thing today that will help make the company more profitable. Make one extra call to get a sales appointment. Perform one extra quality check of a component. Think of one extra idea for innovation.

And then do it again tomorrow. And the next day.

Pretty soon, there'll be no more recession. And no more Bloody Mondays.

Is it me, or are we seeing a trend in press releases and internal memos about layoffs? In announcing the layoffs, whether publicly or "internally and confidentially" (which these days just means publicly with a slight delay — who really, in this day and age, thinks these memos and emails are going to remain confidential?), the companies explain the layoffs, cite the recession, but then talk about how good their company is doing.

Do they ask the workers they're laying off, "Do you want the good news first or the bad news?"

Perhaps some of this is Churchillian stiff-upper-lip talk to rally the remaining troops (and investors). But it's a safe bet that many of the laid-off workers (as well as a lot of those still left on board) will be left wondering if the layoffs were truly necessary.

To be sure, the job cuts may help prop up profit margins right now. But companies need to remember that the recession will end. And on the other side, these companies might wonder why they're no longer employers of choice in the eyes of the talent they will then need to hire. People remember how they're treated on the way out, and they tend to tell other people.

Bottom line: make sure your messages are consistent. If you're laying people off, don't brag about how well things are going.

• • •

A language note: The verb — to lay off someone — is two words. The noun — layoff — is one, without a hyphen. The adjective — a laid-off worker — is hyphenated because it's a phrasal (or compound) adjective that precedes the noun. But the worker was laid off — no hyphen.

It's hard enough to do a layoff. It shouldn't be so hard to write about it.

Cal Ripken Jr. must be be relieved. Thanks to the Department of Labor, it just got a little bit harder to become an "Iron Man."

On Friday, the DOL's new Family and Medical Leave Act regulations go into effect. The changes are many and we will cover them in greater detail in posts to come. But before we judge the new regulations, we should consider the thinking that went into these changes. And wonder whether Washington regulators have perhaps a little too much time on their hands.

Apparently, someone thought that the FMLA and its previous regulations left open a question over a critically important issue: namely, who should be entitled to win a "perfect attendance" award. Fortunately, many smart and well-intentioned people devoted countless hours to examining the potential injustices that could arise from the awarding of an honor like this. Apparently, some companies, mired in the 1950s, still give out perfect-attendance awards to employees who infect their coworkers with whatever cold or flu or other virus they have when they should have stayed home and eaten chicken soup and watched "The View." These host monkeys then win trophies for the mere fact that each and every day, they showed up. Woody Allen would be proud.

Enter the FMLA. Part of the statute talks about returning FMLA leavetakers to their same jobs or to "equivalent positions." Unsurprisingly, "equivalent positions" must get "equivalent pay." In calculating "equivalent pay," employers must take into account any raises or bonuses that the leavetaker would have gotten had he or she not been on FMLA leave.

Aha! Now comes the puzzle inside a riddle wrapped in an enigma, or a jelly roll, or whatever. What if the bonus the employee would have gotten but for the FMLA leave is a perfect-attendance award? Forget superstring theory and the God particle — this is a tough one. Even "Where did the Island move to?" is a far easier question.

Fortunately, the DOL has solved this conundrum in the new regs. The regs say that

if a bonus or other payment is based on the achievement of a specified goal such as hours worked, products sold or perfect attendance, and the employee
has not met the goal due to FMLA leave, then the payment may be denied,
unless otherwise paid to employees on an equivalent leave status for a
reason that does not qualify as FMLA leave.

The regs then provide a helpful example:

For example, if an employee
who used paid vacation leave for a non-FMLA purpose would receive the
payment, then the employee who used paid vacation leave for an FMLA-
protected purpose also must receive the payment.

In other words, if an alcoholic employee takes four weeks of FMLA leave to go through rehab, he can't come back all clean and sober and expect to be granted a perfect-attendance award. Which makes sense, since he didn't actually attend work for four weeks.

The fact that so many people worried about foolish attendance trophies that the DOL needed to waste time on this issue is amazing enough. That organizations such as the Working America Education Fund, the Center for
WorkLife Law, and the National Partnership for Women & Families actually argued against this change is truly unbelievable. These groups claimed that this change would create a disincentive to take FMLA leave. You know, because workers like trophies.

The DOL's Final Regulations are here in PDF form. The prefatory material makes reference to these organizations' concerns. The DOL has an entire portal devoted to the rules here.

In the meantime, employers with perfect-attendance-award programs should probably tear them up and go home and watch "Leave It to Beaver."

Today's earlier post "On layoffs and leaks" had a typo in it. A word, a very short word, was inadvertently left out. (Why is it that we never do things advertently?)

Unfortunately, it was a very important word: not.

The corrected passage reads:

In my experience, surprising employees with bad news tends to increase P. For that reason, we always tell clients that an employee who is about to be disciplined or fired should not be surprised by it. Otherwise, the surprise acts as a multiplier of the bad feelings that come with the bad news, and it raises P even more.

It doesn't make as much sense without the not.

The original post has been corrected, but many of you receive this by email subscription, so I wanted to make sure I pointed out the slip. Thanks to the sharp-eyed readers who pointed out.

Notwithstanding my last rosy post on the economy, "Fear sells," we are indeed spending a lot of time at our firm talking with clients about layoffs. They are, without a doubt, one of the worst things an HR professional or a management lawyer has to deal with. (Of course, let's not forget: they are much harder on the laid-off employees.)

One of the concerns we heard over and over from our corporate clients was how to avoid the gossiping and rumormongering that can surround layoffs like circling vultures. Oftentimes, ahead of a planned layoff, companies will go all CTU-style need-to-know on their employees. The thinking here is that layoffs should be kept secret until they're rolled out at H-hour. This keeps the rumors to a minimum, and keeps employees productive until the embargo lifts and the layoffs actually occur.

That's dumb.

Well-intentioned, but dumb. You see, one of the principles of this blog is that any given employee at any given time has a certain probability — P — of suing the employer. Certain events, such as firing the employee, tend to raise P. While it is impossible to reduce P to zero, it is the role of managers, HR pros, and employment lawyers to help lower P.

This is my fifteenth year of helping employers fix workplace problems. In my experience, surprising employees with bad news tends to increase P. For that reason, we always tell clients that an employee who is about to be disciplined or fired should not be surprised by it. Otherwise, the surprise acts as a multiplier of the bad feelings that come with the bad news, and it raises P even more.

The same is true in a layoff situation. To be sure, no one wants the workplace shut down because everyone's too busy gossiping and spreading rumors before an expected layoff. But carefully leaking some information about the upcoming layoff, maybe a week beforehand, gives people a chance to come to grips with their possible fate. Those whose departments are underperforming, or whose own work performance is weak, may come to realize that their departure is inevitable. I'm not saying that they're going to be happy about it. But without the element of surprise to exacerbate the hurt feelings and other emotions that come with a layoff, their personal P may be low enough to avoid lawsuits.

There's a lot of talk in the press about the effect that the Really Bad Economy is having on employees. Tomorrow's Boston Sunday Globe has a story, "Towers Perrin executive helps firms through turbulent times," which talks about "the stress of this [economic] downturn" and asks the question, "How do companies manage the fear and uncertainty their employees have ...? The New York Times has a current blog discussion called "Fear Factor in the Workplace."

Yes, many of your employees are afraid. They read the papers, watch the local and national news. They hear anecdotes from friends and neighbors. Everyone's talking about the economy and how bad it is. And they are afraid.

But ask yourself, "Who benefits?" (If you want to sound fancy, like, er, a lawyer, you can say it in the original Latin: cui bono. Very fancy.) Who benefits from all this bad news we're hearing?

A good way to answer "Cui bono?" is to follow the money. Newspapers — whose industry is in as good shape as the buggy-whip industry was a hundred years ago — need to sell more papers. They also need to sell advertising, and to sell advertising, the papers have to promise to deliver more readers. Same with local TV stations. They need more viewers so that they can sell advertising. Ditto for the networks.

So which headline gets more people to buy a newspaper or watch the late local news — "The economy is doing just fine" or "RECESSION WORSENS — Film at 11"?

Don't get me wrong: I'm not saying that the economy's great, or that the media is making up stories. But the papers and magazines and TV news are deciding what to report on and how to report it, and they all need something to drum up readers and viewers. So they report more about fear than about hope. Because fear sells.

Do you have any idea what the S&P 500 has done since November 20? Judging from the headlines and news stories and general malaise in the public, you might think that the market is locked in a death-spiral. In fact, the S&P 500 is up18 percent over the past seven weeks, and it was up 24 percent just a few days ago. But you won't hear much about that in the news, because fear sells.

Talk to your employees about the economy. Help them put their fears to rest. Fearful employees are not gruntled employees, and gruntled employees make for a more profitable workplace.

Boston College athletic director Gene DeFilippo announced today that he had fired football head coach Jeff Jagodzinski because the two men were "really divided on the future of this program and what we wanted for the program." It had been reported in the past few days that Jagodzinski was considering interviewing for the newly vacant head-coach position with the New York Jets ("J-E-T-S! Jets! Jets! Je ... oh, shut up already.") DeFilippo told the press that if Coach Jags did indeed interview, he would be fired. This morning, The Boston Globereported that Jagodzinski did interview to be HC of the NYJ, and then DeFilippo followed through with his threat this afternoon.

There had been reports that Jagodzinski's contract with BC had a quasinoncompete clause saying that he couldn't interview for an NFL slot during the first three years of his five-year term (he just finished his second season). But the Globe later reported that there was no such clause. Jagodzinski's pay is reportedly over $1 million a year, although the guaranteed base is apparently much lower.

The Globe's Mark Blaudschun has this story on how DeFilippo felt betrayed, while Globe columnist Dan Shaughnessy decries the trend of sports figures failing to live up to their contracts.

Jagodzinski must be hoping that the interview went well, or that he lines up something else soon. DeFilippo in his press conference today did say, "I love Jags." So he's got that going for him.

What do you think? Was it fair for Jagodzinski to pursue what he thought was an opportunity to better his career, despite having committed to stay at BC for five years? Was it the right call for BC to swiftly punish Jagodzinski for his disloyalty? I'm a management lawyer, and I can't stand the Jets, so I'm siding with BC here. Go Eagles!

Ron Baker is the world's leading guru on value pricing, and his amazing books and ideas have formed the foundation for much of my firm's no-hourly-billing business model and our new sister blog, The Client Revolution. But he recently posted an article on his Verasage Institute blog on a topic closer to this blog's workplace focus: performance evaluations. In "Performance Appraisals: Paper Shuffling," Ron criticizes the practice of annual performance evaluations as outdated and overly focused on the negative.

Ron questions the slavish devotion to appraisals:

Firms have an irrational faith in the effectiveness of performance appraisals. Most firms and employees are dissatisfied with the performance appraisal process, so it remains a curiosity why this methodology continues to exist.

He believes that the goal of firms should be to

strive to create a meritocratic environment that rewards risk taking and innovation, rather than rigid, stultifying union-type jobs that reward seniority, mediocrity, and complacency.

Getting rid of the annual performance evaluation is a good step in that direction.

I went to law school at Boston College. Here's the thing about going to law school at BC: the law school is fairly cut off from the rest of the university. So we don't really care how the school's teams are doing.

Unless they're doing well. When BC shocked No. 1 Notre Dame in the 1993 "Holy War" game, 41-39 as time expired, and Sports Illustrated put BC on its cover, we were all about Boston College. But this year, when BC missed out on the Orange Bowl and then got beaten at the always-prestigious Whatever Bowl Music City Bowl, I glanced at the headline, yawned, and moved on to discussions of the Red Sox Hot Stove season.

But today The Boston Globereported that BC was threatening to fire football coach Jeff Jagodzinski because he was contemplating interviewing for the vacant head-coach position of the New York Jets. As a fair-weather BC fan, I can't say that I care that much. And as a New England Patriots fan, I loathe everything about the J-E-T-S-Jets-Jets-Jets (especially that lame crowd chant).

But as an employment lawyer, the issue intrigues me. Moving up from coach of a barely Top 25 college team to head coach of an NFL franchise is a big career coup. In much of the sporting world, there is an unwritten rule that a team will let its coaches, managers, and other staffers interview for a job with another team if the new job would be a step up. Firing, or threatening to fire, Coach Jags would appear to be a breach of this protocol.

On the other hand, Jagodzinski makes more than $1 million a year coaching at BC. Interviewing for a new job with the Jets raises serious questions about his loyalty to the university that offered him his first head-coaching position. The Globe's Mark Blaudschun reports that Jags is not considered the front-runner for the Jets position, although he is apparently tight with aged Jets QB Brett Favre. In any event, if the reports about BC's willingness to fire Jagodzinski for interviewing with the Jets are true, then he has an important and very risky decision to make this week.

Many employers face the same situation that Boston College is facing. They want their employees to be loyal, and they take offense when employees show a willingness to look elsewhere. For example, a close friend of mine interviewed with a law firm while she was working at another firm. Unfortunately (and unforgivably), some knucklehead at the new firm left a message on my friend's office voicemail about the interview. Except that it wasn't her voicemail. And the person who ended up with the voicemail went and told on her. And my friend got fired. (Never leave voicemails!)

Employers do have a right to expect loyalty from their workers. But loyalty is not the same as servitude. And if an employee feels she can better her career and her life by looking elsewhere, how can you blame her? Instead of worrying about employee "disloyalty," employers should focus on things that make an employee want to stay: career development, increased responsibility, maybe even more money or benefits. On the other hand, a million dollars a year is a million dollars a year.

What do you think? Should BC fire Coach Jags for merely interviewing for a new job?

Our employer clients often ask us, "What are the odds that an employee will sue my company?"

Clients frequently ask for odds, especially when it comes to litigation. "What do you think, Jay? Fifty-fifty? Sixty-forty?" But in litigation, odds are just about impossible to calculate. I can tell you if you have a reasonably good case, a reasonably bad case, or a case that is equally likely to go either way. Beyond that, it's nearly impossible to come up with an actual number for the probability of winning.

But as for the odds of getting sued, it is possible to give some useful numbers, based on some rough statistical analysis. Over the holidays, I did some number crunching of my own. Here's what I came up with:

In Massachusetts (where my office is, and where many of our clients are), there are about three million employees working in workplaces with five or more employees. (I got my numbers from 2006 US Census data, the most recent numbers available. You can check it out here.) Employers with fewer than five workers aren't very likely to be sued; in fact, in Massachusetts, the magic number for most employment cases is six employees.

There are about 3,000 discrimination charges filed in Massachusetts in a year, according to the Massachusetts Commission Against Discrimination's 2007 Annual Report. The Massachusetts Attorney General's Office processes about 5,000 wage complaints each year. I got this number from a 2006 Boston Heraldarticle reporting 2005 numbers, and then extrapolated. There were 364 employment cases filed in the Massachusetts federal district court in 2008. (You can check out your state here.) The Massachusetts state-court system doesn't publish this sort of information, but I estimate that about 2,000 of the 35,000 civil cases filed in superior court are employment related.

So all told, we're looking at about 10,000 employee cases for 3,000,000 Massachusetts workers. That's a ratio of 1 in 300. Does that seem like a lot? Wait till you crunch some more numbers.

If you're a Massachusetts employer with just ten employees, then you have a 3% chance of having one of those employees sue you in 2009 (all things being equal). But watch how the numbers jump up as your workforce increases. With a hundred employees, you stand a 28% chance of being sued this year. An employer with 250 employees faces a 57% chance, while a 500-worker employer is staring at an 81% chance. By the time you get to a thousand employees, you have only a 3.5% chance of not getting sued this year. More than a thousand workers, and you face an almost certainty of employment litigation.

You also need to consider the mean number of lawsuits. If you have 300 employees, the mean of your probable lawsuits is (duh) one. At a thousand employees, your mean is 3.3. In other words, a thousand-worker employer has 96.5% chance of getting sued, and is likely to face an average of just over three different employee lawsuits in a year.

Keep in mind: these numbers don't account for a number of factors that could lower or raise your company's odds. For example, your industry is a big factor: restaurants, hotels, and hospitals are more likely to be sued; while law firms are less likely. Whether your company is unionized is another big factor: if it is, you're much more likely to be sued. Also, your state may have different odds. Massachusetts is a classic blue state with employee-friendly laws and institutions; a red state is likely to have lower odds for lawsuits.

Still, it's useful to have a rough idea of the risks you face. Once you know the risks, you can better prepare for them.